Pipeliners

HOT MOSCOW, September 6 (RIA Novosti) - E.ON AG, the world's biggest private energy and gas concern, will get a 24.5% stake in the authorized capital of a joint venture set up to build the North European Gas Pipeline but will not be involved in the development of the Yuzhno-Russkoye natural gas field, a leading Russian business daily reported Tuesday. Kommersant wrote that Gazprom chief executive Alexei Miller, the Chairman and CEO of E.ON, Dr. Wulf Bernotat, and the chairman of oil producer BASF Wintershall, Jurgen Hambrecht, would sign an agreement on the terms of financing the pipeline on September 8, during Russian President Vladimir Putin's visit to Germany. A source close to the talks said a joint venture would be set up within months through the establishment of authorized capital. Gazprom will provide 51% and E.ON and BASF, 24.5% each. According to the paper, the pipeline, which will cover 1,187 kilometers (about 750 miles) and cost $5.7 billion, will be laid to Europe along the bottom of the Baltic Sea. First discussed in 1997, the idea was as an alternative natural gas route to Germany, Scandinavia and Britain. Its design capacity will be up to 55 billion cubic meters a year. Until yesterday, Gazprom had only one strategic partner in the project. In April, it signed a package agreement on the transfer of a 49% stake in the venture to BASF Wintershall. It also stipulated the exchange of 15% of Wingas (a subsidiary of BASF) shares for a 50% stake Severneftegazprom, a regional oil company in Russia that holds the development license for the Yuzhno-Russkoye deposit in Western Siberia. Located on Yamal Peninsula in the north of western Siberia, it has reserves of 700 billion cubic meters of gas and will be the main provider for the European pipeline. In return, Gazprom is to get access to the end users in Germany and a share in BASF energy projects, the paper said. That agreement spurred E.ON to action. The above source said that no other foreign company could hope to participate in the project now. E.ON's participation in the development of Yuzhno-Russkoye is not stipulated in the agreement, which means that Gazprom has not received everything it wanted and talks will continue. A source close to Gazprom's management said E.ON would not be allowed to dip into the pipeline's raw materials base, the paper said.

# posted by Deval : 5:01 AM